Creating a better experience

If “luck” is defined as when opportunity meets preparedness…then your luck is most certainly going to run out when you completely forego an investment strategy for the sake of a cost-cutting strategy. These times of recession have most management teams scrambling to slash spending in every area of the business. But they are looking at it all wrong. A recession denotes a change or adjustment in the marketplace. Therefore, if the market landscape is changing, then you must change as well. If customer preferences are evolving, then you must evolve too. Change happens with investment. Investment may be in training, customer service, technology or brand-building activity. Focusing only on a cost-cutting strategy could easily blind you to the unmistakable opportunities required to transform your business and take it to the next level with your customers and shareholders.

Cost-cutting edicts from corporate can go too far. As a matter of fact, I don’t like “cutting costs” as a strategy at all…ever. People start cutting without understanding all of the consequences, and as a result, they stagnate growth of the company. Actually, I prefer to use the term “controlling costs” instead, which is not a strategy, but a part of your company’s culture lead by top management’s example. Controlling costs means you are always wise with your money…saving when appropriate and investing when appropriate, every month of the year. But in these times, folks completely forget the concept of “opportunity cost.” Opportunity cost describes what I need to spend today in order to make the overall pie bigger and gain greater rewards in the future…rewards in the form of increased revenue or increased savings or BOTH.

Here’s a simple illustration of what I’m talking about: two teenagers graduate from high school. One foregoes college because he wants to work full time and earn money now to support his lifestyle. He’s livin’ large. The other teenager foregoes getting a job now and goes to college. She’s poor for a while, eats a lot of spaghetti, but once she graduates in four years, there is an ocean of opportunity awaiting that will allow her to build a career and potentially make five times the money of her classmate. She has loans, but she’s a rainmaker and she pays back her investment with her corporate bonuses in just a few years. You know it’s funny…we tell our kids to go to college because we easily understand the concept of opportunity cost. However, we fail to invoke the same principle at our companies.

Your investment strategy will require a price to pay. But if you believe in the strategy and stick to it, then you’ll weather any storm and realize the return on investment you projected. Why? Because you’re smart and it’s a good strategy. But if you bail out of the strategy mid-stream, then you’ll find yourself cutting costs in ridiculous ways in order to recoup the money you spent on a great strategy poorly executed and left dangling. You see this all the time in the public arena. Management has strategy. Management gets scared and ditches strategy. Management slashes spending to boost bottom line. Company loses traction in the marketplace. Revenue declines. Management slashes costs again to boost bottom line. Company does not advance and loses market share. Management is replaced. New management invokes new strategy, doesn’t have the guts to see it through and ditches strategy…The cycle starts all over again and this happens year after year after year.  We can call it the “GM Syndrome.”

Final words: Don’t be GM. Invest and stick to a strategy that includes the talent, training and technology that you know is right for your customers and your company’s long term viability.